FHFA Pushes Refi Program as Expiration Nears

WASHINGTON — The Federal Housing Finance Agency is launching a 10-day social media campaign, #HARPNow, to alert struggling homeowners in 10 states that they can still refinance via the program before it expires at yearend.

The Home Affordable Refinance Program has refinanced 3.38 million mortgages since 2009 but is not expected to be extended again. FHFA estimates that 367,000 borrowers in the 10 targeted areas are still eligible when it comes to meeting the basic HARP requirements.

FHFA initiated the refinance program to fend off calls for principal forgiveness on Fannie Mae and Freddie Mac loans. It provided relief for many underwater borrowers that refinanced into a lower interest rate.

To qualify for a HARP refi, the borrower must be current on their Fannie or Freddie loan that was originated on or before May 31, 2009. The remaining mortgage balance must be $50,000 or more with a remaining term of greater than 10 years and a mortgage rate at least 1.5 percentage points higher than current market rates, according to FHFA.

The 10 targeted states are: California with 16,750 eligible borrowers, Florida with 51,000 eligible borrowers, Georgia with 23,660 eligible borrowers, Illinois with 32,170 eligible borrowers, Maryland with 11,880 eligible borrowers, Michigan with 28,825 eligible borrowers, New Jersey with 13,800 eligible borrowers, New York with 12,230 eligible borrowers, Ohio with 27,300 eligible borrowers and Pennsylvania with 12,290 eligible borrowers. FHFA made the estimates based on September 2015 data.

HARP refinancings totaled 297,480 in the fourth quarter of 2012, according to FHFA data, compared to 21,080 refinancings in the most recent fourth quarter of 2015.

"Demand for HARP loans has dropped substantially since then, but it is not insignificant," according to Bob Walters, the chief economist for Quicken Loans.

Around 10% of homeowners are still underwater. "So for those folks, it can certainly be helpful," he added.

Fannie and Freddie continue to promote the program. "They know that a HARP refinance is four or five times less likely to lead to default. So they are strongly incented to make the program work," Walters said.

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